There is a lot of confusion and misinformation out there regarding loan modification and loan modification companies. In February of 2009 President Obama signed into law the Troubled Asset Relief Program or TARP1 legislation. This legislation included 75 billion dollars allocated to loan modification and refinancing. A significant portion of President Obama's stimulus package is focused directly at helping American citizens facing foreclosure. If an American homeowner is facing foreclosure President Obama wants that person to examine loan modification.
The recent housing crisis which has effectively crippled the economy has conversely created a new and fast growing business niche. The business of loan modification, unheard of a scant 13 months ago, has quickly become one of the fastest growing businesses on the web.
Loan modification or mitigation companies by design are meant to help troubled homeowners. These homeowners, facing foreclosure or the financial hardship presented by depreciating asset values and increased monthly obligations are looking for relief. One possible avenue is home loan modification. Loan "modification" is not loan "refinance," but a change to the parameters of the original loan. These changes include (but are not limited to) change of term, lowering interest rate, fixing adjustable interest rates and/or reducing principle amount.
Mitigation companies are intended to act as a "proxy" or "liaison" between the homeowner and the mortgage holder. The mitigation company works with the homeowner in compiling all the pertinent and required paperwork, submitting it to the mortgage holder and negotiating a modification to the loan. This modification, in principal, allows the homeowner to avoid foreclosure and helps to alleviate financial hardship associated with high monthly home payments.
With rapid growth in a new industry, however, comes open opportunity for con artists, scammers or simply disreputable business people. There is a growing cadre of mitigation "companies" that are nothing more then predators. These companies prey upon those facing foreclosure. They exploit those that find themselves in unfortunate circumstances. They take a lot and deliver little in return.
The largest number of complaints to the Better Business Bureau and the state's Attorney Generals offices concern lack of consideration. These complaints have two things in common: large upfront fees and non performance. Examination of complaints against mitigation companies finds that most of these companies simply took the money and ran.
The internet is a perfect haven for these type of predatory modification "companies." The internet allows virtually anyone with a laptop and internet connection to create a loss mitigation "company." A slick website can easily and effectively disguise a high school dropout "working" out of someone's basement into what appears to be a professionally run modification company with office space, multi-racial workforce and government approval.
The government has taken a proactive stance against this type of predatory company and has put out advertisements warning homeowners against using "for profit" mitigation companies. The government has taken the position that homeowners can do mitigation for themselves.
Unfortunately, this is basically an uniformed or "knee jerk" response to reports of disreputable people taking advantage of distressed homeowners. The simple fact is that loan modification is not easy. It is a very time consuming process often taking 60-90 days or more. Home loan institutions are overwhelmed and sometimes simply not able to walk thousands of novices through the steps of the process. Files without the right information or containing incorrectly filled out paperwork go to the bottom of the stack to start over again. A form of triage occurs where correctly compiled packages are given preference and addressed while incorrectly compiled packages are set aside.
Many bank negotiators are hundreds if not thousands of files behind and falling further behind every day. Homeowners are losing sleep worrying about losing their homes. Facing foreclosure is a very emotional time for homeowners. Mitigation companies can act as an emotional buffer between the homeowner and the mortgage holder.
So how does one secure real help? The most prudent first step is to do your own due diligence. If homeowners are considering modification but lack the expertise, confidence, negotiating skills, patience or time to jump in and attempt it themselves then they must consider seeking assistance from a qualified service company.
Posted By: Tyler J Stanford
Sponsored BY: Principal Mitigation Corp
[http://www.pmcloanmodification.com]
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